First Moores Law, then Metcalfes Law, now McGuires Law

Russ McGuire is a really smart guy, the type of guy who does not think outside the box but rather about what the box should look like to begin with. He was chief strategy officer for TeleChoice back when the industry could support a smart guy sitting around thinking about where the telecom market was going to go next. Some of our best thinking has come from discussions with Russ, who is now deep in Sprint/Nextel’s strategy organization.

In the course of a strategy project we were working on recently at Sprint/Nextel, we heard people talking about McGuire’s Law and how it will impact the company’s future direction. McGuire’s Law is rather simple. When you speak to Russ, he’ll talk humbly about the Law of Mobility (it’s his compatriots that speak of it as McGuire’s Law). The period from 1985-1995 was very much dominated by the massive impact of the PC on business — driven by Moore’s Law, which states that computer processing power doubles every 18 months at the same price point. The period from 1995-2005 has been dominated by the impact of the Internet on business — driven by Metcalfe’s Law, which states that the value of any network increases exponentially with the number of users.

Recent events have coalesced to bring us to a third period, the Age of Mobility. The integration of the Centrino chip into laptops has cemented the move to Wi-Fi everywhere. Cell phones have been taking off on their own accord, spawning products such as ringtones and fashion accessories. Until recently, McGuire notes that the cost of taking an object and having it talk to the network from wherever it was has been relatively expensive. Recent technological changes have pushed us over a new threshold, however, and now the value of adding mobility to any product outweighs that increased cost. That’s the tipping point.

So we’re now in the Age of Mobility, governed by the Law of Mobility. Thanks to cost reductions of Moore’s Law, scalability resulting from Metcalfe’s Law, convergence and miniaturization of devices and increasing ubiquity of 3G wireless networks, the cost of making any product (especially one involving information) available all the time is plummeting. Therefore, McGuire concludes, just as computing power and the Internet have been built into virtually every product, mobility is beginning to be built into every product.

The Law of Mobility states that the value of any product or service increases exponentially with mobility. McGuire points to the TV set. If one were to graph price vs. display size, with the US$3,500 42-inch plasmas at one end, all the way down to the 5-inch, black-and-white handheld AM/FM units that you can get for about $30, then you’d think that a 2-inch screen on your cell phone would be worth about $20. Yet users will pay far in excess of this — including monthly and even per-show fees — to be able to squeeze in their favorite sitcom while riding home on the subway.

The key to the measure of mobility is the increase in the per cent of time the product is available for use. A smartphone with Windows Mobile has a premium that approaches the cost of a desktop computer even though it has far less screen real estate, far less memory, virtually no disk space and poor excuses for Word, Excel and PowerPoint, but it’s with you 100 per cent of the time.

The challenge for IT is to figure out how to help your firm build mobility into products to add exponential value. You deployed the PCs during the Age of the PC; you networked everything you could during the Age of the Internet. Now, during the Age of Mobility, the strategic thinkers are asking, “What are you doing to mobilize your products on behalf of your company?” It’s an IT manager’s dream world.

More than anything else, what I like about the thinking around McGuire’s Law is that it puts today’s IT challenges into a framework that a board of directors can understand. They know Moore. They know Metcalfe. It’s time for them to meet McGuire.

QuickLink: 063587

–Briere is CEO of TeleChoice, a market strategy consultancy for the telecommunications industry. He can be reached at[email protected].

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